Loans are by nature sources of change
Partnerships are by nature a source of change, so you’ll want to identify what might cause you stress in a partnership as soon as possible. The checklist in Exercise 4 will help you determine which of the most common stress points in a partnership affect you most. The statements you mark “yes” indicate areas that are likely to cause you some anxiety when it comes to change. If you dislike giving up control when performing a task, for example, you probably feel stress in a partnership when you have to do a task together. The anxiety you feel is the aftermath of the change you’re experiencing. You may try to avoid or even deny the change to prevent the anxiety—this is the normal “fight or flight” response we all experience during periods of stress.
If we can’t control the change that’s occurring around us, at least we can recognize the stressors and develop a plan to deal with them. Knowing your stressors and how you react to change is important in helping you cope with change.When two people or two organizations come together, things are bound to be different.
Loans are particularly exposed to currency movements
Being one of the most global sectors, the automotive sector is particularly exposed to currency movements. Significant changes of major exchange rates therefore may have a material impact on earnings. Yet, some manufacturers are better positioned than others due to a number of factors that do not only relate to natural or derivatives hedging. Awell-filled model pipeline, restructuring plans, cost reduction issues and a high degree of flexibility in the use and sourcing of raw materials and intermediate goods may outweigh negative effects due to currency fluctuations. With regard to transaction risk, those companies that have no foreign exchange exposure or are hedged, either naturally or through derivatives, clearly have the lowest risk. In terms of translation risk, companies whose assets and liabilities are well matched have the lowest risk and will have the lowest volatility of operating profits.
During the 2002/03 US dollar weakness, revenues and to a lesser extent operating profits of most European industrial issuers suffered significantly due to substantial US operations. However, exposure to US markets varies across industries.